Notes Payable

3 Months Ended

Sep. 30, 2016

Notes to Financial Statements

6. NOTES PAYABLE

The Company issued a promissory note ("Note") for $650,000, payable to the Borkwood Development Ltd, a previous shareholder of the Company ("Seller"), payable and amortized monthly and carrying an interest at 5% per year. The Company has the right to prepay the note at any time with a notice of 14 days. To secure the payment of principal and interest the Sellers will receive a perfect lien and security interest in the Shares in the company ANV until the note with accrued interest is paid in full., and, 2) In the case that the Note has not been repaid within 12 months from the day of closing the Sellers have the right to convert the debt to common stock of Advanced Oxygen Technologies, Inc. in an amount of non diluted shares calculated on the conversion Date, equal to the lesser of : a) Six hundred and Fifty thousand (650,000) or the Purchase Price minus the principal payments made by the buyer, whichever is greater, divided by the previous ten day closing price of AOXY as quoted on the national exchange, or b) Fifteen million shares, whichever is lesser. The Note has been extended until July 1, 2017 and interest waived through the period ending June 30, 2016. The balance on the note as of September 30, 2016 and June 30, 2016 was $127,029.

The Company has a note payable with a bank. The original amount of the note was kr 800,000 Danish Krone (kr) ("Note A"). The note is secured by the revenues of the lease with Statoil, with a 7.00% interest rate and 1.75 years left on the term. The balance on the note as of September 30, 2016 was $18,091. The Company made principal payments of $2,491 and interest payments of $369. The value of the note reflect the currency adjustments. The paragraph below summarizes the company's commitments going forward.

The Company has a note payable with a bank ("Note B"). The original amount of Note B was kr 1,132,000 Danish Krone (kr). Note B is secured by the subsidiary's real estate, with a 2.00% interest rate and 7.2 years left on the term. The balance on the note as of September 30, 2016 was $124,462. During the period ended September 30, 2016, the Company paid $4,077 in principal payments and $647 in interest.

The Company's debt obligations at September 30, 2016 and June 30, 2016 are:

	September 30,		June 30,
	2016		2016
Bank Loans	$	142,553	$	146,467
Borkwood Development Ltd		127,029		127,029
Total Debt		269,582		273,496
Current Portion of Debt		151,452		150,887
Long-Term portion of Debt	$	118,130	$	122,609

The Company has minimum yearly bank payments of $33,610 for 1.75 years, and $22,397 thereafter for another 5.5 years.

The amounts stated in this note reflect the Company's commitments in the currencies that those commitments were made and the amounts are an estimate of what the US dollar amount would be if the currency rates did not change going forward.